Monday, December 31, 2012

How Fitting: One Last Permit For 2013 -- Whiting

Bakken Operations

Wells coming off confidential list today and over the weekend were reported earlier; see sidebar at the right.

One last permit for 2013:
  • 24692, loc, Whiting, Faiman 34-33PH, St Anthony, Dunn County
So, "we" finish the year with 2,521 oil and gas permits, though a fair number were canceled. This does not include salt water disposal wells.

Another Graph: What a Great Way To End The Year!

Link  here to CarpeDiem.

In addition to the graph at the link, another graphic and several great stories. And as far as I'm concerned, it all started with the Bakken. Whoo-ah!

Data Points From the December, 2012, CLR Corporate Presentation

CLR corporate presentations can be found here

Note: in some cases numbers may be rounded.

The Briefing Begins With The Bakken
Largest Continuous Reservoir of "Unprecedented Magnitude"

Data points:
  • for CLR: proved reserves: 610 million bbls of equivalent oil at mid-year, 2012
  • current production: >105K boepd
  • estimate: almost 60% y/y production growth 2012/2011
  • cash margins: >70%
Middle Bakken and First Bench (Upper) of the Three Forks

  • full development
  • continuous oil field: 15,000 square miles x 640 acres --> 9.6 million acres
  • true oil play: in 2010, it was estimated that 24 billion bbls were technically recoverable
  • currently less than one (1) well per 1280-acre spacing unit
  • full development: 4- to 8- wells per zone for full development
Lower Three Forks
  • increases OOIP by almost 60% --> 903 billion bbls
  • slide 6: suggests 45 billion bbls recoverable (see MDW calculations below)
  • Discusses CLR's exploratory work with the Three Forks (slide 8)
  • proved separation of middle Bakken and the upper Three Forks
  • theorized four Three Forks benches; proved two; testing a third; plans to test the fourth
CAPEX for Three Forks "produce while exploring" in 2013
  • Three Forks accelerated de-risking: $70 million
  • 320-acre spacing pilot, two areas; one in southeastern Divide County; one in southeast McKenzie County: $160 million 
  • 160-acre spacing pilot, near the Charlotte wells in north-central McKenzie County: $36 million
Single well economics, current (slide 9)
  • 10,000-foot lateral; 30 stages
  • EUR: 600K
  • well costs: single well, $9.2 million; ECO-Pad well, $8.5 million
  • rate of return: at $80 oil, 50% RoR; at $60 oil, 20% RoR
Single well drilling vs 6-well pad drilling (slide 10)
  • 200 days to drill six single wells; 130 days to drill a 6-well pad
  • $30 million to $22 million; $8 million savings
Evacuation capacity (slide 12)
  • pipeline and rail through 2017
  • currently: 900K bbls committed to pipelines; 900K bbls rails --> 1.8 million bbls; another 1.3 million bbls proposed pipeline
  • CLR first to send Bakken oil directly to Tesoro Refinery, Anacortes, Washington, September, 2012, rail
Interesting observations, back of the envelope calculations:
  • CLR says they lease 10% of the Bakken; with ~ one million acres, that suggests about 10 million acres in the Bakken
  • back of the envelope: 8 wells/640 acres. Average EUR of 400,000 bbls. 8x 400,000 = 3,200,000 bbls/640 acres or 5,000 bbls/acre. Ten million acres x 5,000 bbls/acre --> 50 billion bbls. Cross-checking: 1 trillion bbls original oil in place x 5% recovery --> 50 billion bbls; if one cuts this to 8 wells/1280 acres --> 24 billion bbls

The Briefing Then Switches To the SCOOP (South Central Oklahoma Oil Province)
A New, High-Impact Resource Play

Data points: SCOOP
  • dual reservoir: upper and lower Woodford
  • 6x the Cana Field
  • 3 of the top oil-producing counties in Oklahoma
  • 3 billion bbls of oil produced
  • 60 reservoirs
Commanding position in the SCOOP (again, some numbers rounded)
  • 100,000 acres at end of 2010 (3% held by production)
  • 200,000 acres at end of 2012 (20% held by production)
  • 2 billion bbls oil equivalent potential to CLR; based on unrisked, 80-acre spacing
  • 50% RoR

Still Looking For Another Proppant Source Closer to Home

Link here to
Today's ceramic proppants come either from overseas -- Brazil, Russia or China -- or from the "kaolin belt" in Georgia and eastern Alabama. That is because they must contain either kaolin or bauxite to work in current formulations.
Austin-based Brownwood Clay Holdings, LLC, (BCH) is announcing the development of a method for making ceramic proppant out of a type of clay found near many of the top shale formations which, if proven commercially viable, could slash the cost and the delivery time for this type of proppant.

The product is currently completing the testing phase, according to Gary Davis, co-operating manager of BCH, and is looking for a partner to manufacture the proppant. Should they find one in 2013, Davis said they could have product ready for delivery by 2015.
The idea has been under consideration for two to three years, starting with the consideration of how to utilize a clay deposit on 476 acres of land BCH owned near Brownwood. BCH consists of a number of owners of this land, some of which have been connected with the property for more than 50 years, others for just a few years. The clay had previously been used for brick and tile, but Davis and his associates were looking for greater uses.
Along with that link, Don sent me a great link to a NDGS article on North Dakota clay. This is a PDF file with great photos. I remember playing on this stuff growing up in North Dakota.

And, y'all knew what video was going to show up:
The Night The Lights Went Out in Georgia, Reba McEntire

Not For Investors Only: Legacy Oil And Gas

Link here to

Add this post to the few posts regarding the Spearfish and the companies most involved: Legacy and Surge. Legacy has its own link at the sidebar at the right. (Having noted that, maybe I need to do the same for Surge. But I digress).

First, for investors:
The past nine months have been painful for investors with exposure to the Canadian resource sector. The smaller the company, the greater the pain.
Got that out of the way.

Now, for non-investors. Remember, there are "two" Bakkens: the Williston Basin Bakken, and the Alberta Basin Bakken, farther west.

Williston Basin - Saskatchewan/North Dakota
In the Williston Basin, Legacy has both light oil resource plays (Bakken, Torquay, Spearfish) and conventional Mississippian (Souris Valley, Tilston, Alida, Frobisher, Midale). The production from these plays is a high quality light oil averaging 37 degrees API.
On 242,352 net acres of undeveloped land, Legacy has more than 1,000 (net) drilling locations as follows:
- Bakken - more than 200 net development drilling locations at four wells per section
- Torquay - large resource mapped adjacent to Sinclair Torquay pool
- More than 350 net Mississippian development drilling locations
- Spearfish - more than 440 net locations at eight wells per section
All of these areas are well defined by 3-D seismic and have significant reserve growth potential through the use of waterflooding.

New Year's Eve -- Bakken Notes; Other Links; Top Stories of 2012 Are Posted

Wells coming off the confidential list over the weekend have been posted.

At the link, Hess reports another nice well; OXY USA reports another OXY USA well.

Brett sent in a comment noting the Truax oil field and wondering what field was most productive. The MDW showcases several good fields in various locations. One of them is at the sidebar at the right, the ten oil fields that are of interest, not necessarily simply because of production. One could do a statistical analysis of the various fields but one cannot simply compare overall production. There are just too many variables. Some fields are as small as one section (640 acres); others are as large as two townships (72 sections --> 46,080 acres). 

RBN Energy: this will be a lot of fun. A re-cap of the top RBN blogs this past year. Alert! Alert! Do not read any farther if you do not want to know the #1 RBN blog this past year. This was the #1 RBN post this past year: Bakken pricing. If you are at all interested in the Bakken, I cannot think of a better site than RBN Energy where I would be spending my time.

By the way, the MDW has posted the top stories of 2012. These are not the top posts, but rather the top "news" stories of 2012. Most of them are about the Bakken but a few are not.

Another great story on revival of the steel industry due to hydraulic fracking. Nothing new for regular readers of the MDW. Steel industry, railroad industry, trucking, if the EPA shuts down fracking, it shuts down the US economy.
The U.S. shale-gas revolution, which has revitalized chemicals companies and prompted talk of domestic energy self-sufficiency, is attracting a wave of investment that may revive profits in the steel industry. 
Austrian steelmaker Voestalpine ..... may construct a 500 million-euro ($661 million) factory in the U.S. to benefit from cheap gas. Nucor Corp., the most valuable U.S. steelmaker, plans to start up a $750 million Louisiana project in mid-2013. They’re among at least five U.S. plants under consideration or being built that would use gas instead of coal to purify iron ore, the main ingredient in steel.
“That technology has been around 30 years, but for 29 years gas prices in the U.S. were so high that the technology was not economical,” said Michelle Applebaum, managing partner at consulting firm .... “This is how steel will be built moving forward.” 
No links but the winter storms continue: today in Oklahoma, later this week, the East Coast. 

Gulf Coast Oil Being Shipped to Canadian Refineries; US Production Hits Highest Since 1994

"Anon 1" sent this most interesting link. The story stands without need for comment.

At Bloomberg:
Valero Energy Corp. has received approval from the Commerce Department to ship crude from the U.S. Gulf Coast to its Quebec City refinery.
The 235,000-barrel-a-day refinery processes primarily light, low-sulfur crude from Europe and Africa, Bill Klesse, Valero’s chief executive officer, said during the company’s third-quarter earnings call on Oct. 30. Shipping costs from the Gulf Coast to Quebec averaged about $2 a barrel or less, he said. The company hasn’t transported any significant shipments yet, Bill Day, a San Antonio, Texas-based spokesman for the company, said today [December 20, 2012] in an e-mail.
U.S. crude production increased to 6.863 million barrels a day last week, the most since January 1994, Energy Department data show. The production gains have been primarily light, low sulfur crude from Bakken and Eagle Ford shale formations in North Dakota and southern Texas. U.S. crude moving to Canada would displace light, sweet oil from West African nations like Nigeria and Angola, said Amrita Sen, chief oil market analyst for Energy Aspects Ltd in London.
Nothing else to say.